Nine:
Kickstarting Development

Almost
from the first months following
Confederation, Ottawa’s
programs affected some regions
more positively than others.
All provinces did not share
prosperity equally; this
pattern of regional disparities
has persisted and probably
worsened in recent years.
Initiatives designed to
reduce existing disparities
and promote economic development
in poorer regions were introduced
in rapid succession following
the late 1950s when national
politicians first grasped
the large differences in
levels of regional prosperity,
and accepted responsibility
for removing them.

Billions
of tax dollars have been
spent since by way of regional
development and regional
fiscal adjustment measures.
Yet, no single economic
theory exists to explain
regional disparities; nor
is there yet much agreement
on even the best theoretical
approach to the problem.
One reason for the lack
of a coherent overall policy
may be that the debate over
regional development has
been left largely to politicians.
A former senior official
of Ottawa’s Department of
Regional Economic Expansion
admitted, "Regional development
is sustained almost entirely
by politics and by a political
commitment." In Ottawa,
where regional economic
considerations are often
equated with partisan politics,
programs that are formulated
under a "national" label
are intended to benefit
provinces with heavier political
clout. As a result, regional
jealousies, feelings of
frustration and even anger
are built up, while economic
disparities between rich
and poor provinces, most
notably those in Atlantic
Canada, are perpetuated.

It
is probably on the rocky
field of economics that
the friction between Outer
and Inner Canadians continues
in its most acute form.
Evidence, both anecdotal
and statistical, is abundant.
A family left southeast
Edmonton in the mid-1980s
to return to Toronto from
where they’d come in the
late 1970s. The continuing
flat Alberta economy after
the 1982 recession meant
there was no longer sufficient
work in the husband’s realty
consulting field. They finally
managed to sell their Edmonton
home for about $85,000 and
to acquire a smaller one
in a Toronto suburb for
$215,000 in 1985. Their
new home is, of course,
worth far more now. Many
other Outer Canadians left
their homes to establish
themselves in one of our
largest cities. In doing
so, they lost their entire
equity. After selling their
homes as prices in Outer
Canada were sagging, they
are now paying rent in Toronto
or Ottawa.

A
central issue of Canadian
unity has to do with income
levels across the country.
During the most recently
surveyed decade, 1971-81,
residents of Atlantic Canada
had a per capita market
income which varied between
about 54 per cent (PEI)
and 69 per cent (Nova Scotia)
of the national average.
There is no reason to believe
that this state of affairs
has since improved for Atlantic
Canadians; it has probably
worsened significantly over
the past few years. A number
of government programs,
combined with positive factors
such as a lower cost of
living, mercifully do improve
the overall Atlantic picture.
The personal disposable
income per household in
three Atlantic provinces
today is about 80 percent
of the national average.
The overall economic "penalty"
for remaining an Atlantic
Canadian remains in the
20 per cent range.

It
is still true, as a Special
Senate Committee on Poverty
reported almost twenty years
ago, that most low income
Canadians are concentrated
in Québec and Ontario. It
is also true that family
incomes for poorer Canadians
are generally higher in
Atlantic Canada and Québec
and lower in the Prairies
and Ontario. Average family
incomes in Outer Canada,
however, are well below
those in Toronto, Montréal
and Ottawa.

Regional
unemployment rates are another
important dimension of the
economic issue. In recent
years the level of unemployment
in several provinces is
much more than that of Inner
Canada. The average Ontario
unemployment rate during
1988 was 5 percent; for
the same year the average
for Newfoundland was 16.4
per cent, PEI -- 13 per
cent, Nova Scotia -- 10.2
per cent, New Brunswick
-- 12 percent, Québec --9.4
per cent and B.C. -- 10.3
per cent.

Earned
income per capita may provide
a more accurate measure
of a region’s economic performance
than per capita income.
Earned income excludes relative
gains resulting from interregional
transfer payments and thus
better reflects the overall
economic prospects of a
province or region. According
to this indicator, regional
disparities are even more
pronounced, and disparity
narrowed only slightly between
1961 and 1981.

Another
interesting measurement
is the total amount of government
spending in each province
as a percentage of the province’s
gross domestic production.
In 1981, the national average
was 39 percent, but it was
69 per cent in PET, 81 per
cent in Nova Scotia, 72
per cent in New Brunswick,
63 per cent in Newfoundland,
47 per cent in Québec, 35
per cent in Ontario, 41
per cent in Manitoba, 35
per cent in Saskatchewan,
23 per cent in Alberta,
and 32 per cent in B.C.
In 1987, combined federal
and provincial government
spending equalled almost
two-thirds of the economy
of the Atlantic provinces
-- almost twice its significance
in Ontario (37 per cent).
In Saskatchewan, the government
share in 1987 soared to
64 per cent from 35 per
cent in 1981. In Alberta,
government spending amounted
to 38 per cent of the provincial
economy the same year compared
with 23 per cent in 1981
when the province was far
less dependent on the public
sector to sustain its economy.

No
doubt, this public spending
has allowed residents of
our poorer provinces to
enjoy a higher standard
of living than would have
been the case without transfers.
Yet, provinces where the
percentage of public spending
is very high are becoming
almost financial wards of
Ottawa. The well-being of
their residents is to a
substantial degree dependent
on the inclinations of the
federal government. In the
long run, moreover, their
development may actually
be hindered by transfers
since the adjustments required
for greater economic self-sufficiency
are less likely to be made.

One
major consequence of the
stress created by these
economic conditions over
the decades is that larger
numbers of Outer Canadians
are emigrating to southern
Ontario and elsewhere in
search of better futures.
The 1986 national census
documents point out this
pattern: that year approximately
1,000,000 Canadians lived
in different provinces than
they had five years earlier.
During the 1976-81 period,
the four provinces of Western
Canada overall gained about
a quarter of a million inhabitants
through inter-provincial
migration and about 200,000
more through immigration
from outside Canada. Following
the economic recession that
hit the Western economy
in 1982 and lasted several
years, the region gained
a few thousand people through
inter-provincial migration.
The four provinces did manage
to attract 150,000 newcomers
from outside Canada. These
newcomers -- often bringing
children, and usually very
hardworking -- helped to
fill our schools, provided
impetus to construction,
assisted in finding new
markets for our exports
and generally boosted the
four economies. They also
enriched many communities
culturally and intellectually.

For
Atlantic Canada, the demographic
trend was uniformly bleak.
In each of the four provinces,
more Canadians were leaving
than moving in during the
1976-81 period. Newcomers
from abroad were too few
to offset the losses. The
pattern improved slightly
in the 1981-86 period, but
not enough to significantly
alter the region’s or any
of its provinces’ share
of our national population.
It continues to be about
9 per cent of the total.

Québec’s
post-1971 experience is
similar to that of Atlantic
Canada. Between 1976 and
1981, its overall loss of
population to migration
within Canada was a little
over 140,000 people. A little
more than half this number
settled in Québec during
these years as immigrants
from outside Canada. A low
provincial birth rate was
another blow to its hope
for an increased share of
the national population.
In the five years up to
1986,63,000 more Québeckers
were leaving the province
than moving into it from
other provinces. Only 72,000
moved in from abroad. Many
Québeckers fear that their
share of Canada’s population
is bound to drop below 25
per cent before the turn
of the century. This fear
has became grist for the
independence mill.

From
1976-8 1, Ontario lost about
78,000 residents through
migration almost entirely
to B.C. and Alberta. During
the next half-decade, Ontario’s
net interprovincial migration
alone more than offset those
losses. Moreover, the province
received another 221,000
immigrants from outside
Canada for an overall gain
in newcomers alone of more
than twice the population
of Prince Edward Island.

Regional
Disparities

The
statistics show that economic
disparities have persisted
despite efforts by a series
of federal governments.
The contrast has been most
evident between Central
Canada-- southern Ontario,
in particular-- and the
Maritimes, parts of Québec,
Northern Canada and Western
Canada.

Acknowledging
the differences in the regions,
Liberal and Conservative
governments since the late
1 950s have attempted to
equalize funding, programs
and opportunities for Canadians.
They endeavoured to develop
an effective policy approach
after breaking the elements
of regional inequality into
a number of broad categories:
the natural endowments of
a local economy, such as
geographic features that
provide economic benefits,
e.g., oil; the inequity
of certain federal or provincial
actions where disparities
can be most successfully
reduced; market imperfections
caused by local monopolies;
particular consumer preferences
in a region, etc. The Walter
Gordon Commission in the
l950s examined this subject
and the Trudeau government,
elected in 1968, established
a series of programs beginning
with the creation of the
Department of Regional Economic
Expansion in 1969. The Department
of Regional Industrial Expansion
followed in 1982-83.

In
the early 1980s, an Industrial
and Regional Development
Program was announced and
the Department of Industry,
Science and Technology was
created. The Mulroney government
founded three regionally
based agencies: the Atlantic
Canada Opportunities Agency
is to spend a $1.05 billion
budget over five years on
developing the economy of
the Atlantic region; NORFED
was established for Northern
Ontario with a budget of
$55 million over five years;
and the Department of Western
Diversification was launched
for the four western provinces
with a five year budget
of $1.2 billion.

Yet,
despite a host of government
efforts and repeated reorganizations
of the departments over
the years, regional disparities
have not been reduced significantly.
Equally important, regional
disparity in public attitudes
have remained at high levels.
Outer Canadians in 1990
feel disenfranchised from
their national government
in a general sense according
to how far they live from
Ottawa.

Dissatisfaction
has led to periodic and
at times almost comical
reorganizations of federal
efforts, often reflecting
the desire of various ministers
and cabinets to put their
own mark on regional development
policy. Numerous regional
initiatives sought to create
jobs; but they didn’t achieve
the changes in the structure
of provincial economies
needed to ensure long-term
opportunities for sustainable
growth. Creating new jobs
usually implies that growth
has occurred. Growth alone
should, however, not be
confused with economic development
as it may not mean any improvement
in the region’s future prospects.
A greater scope for self-sustaining
growth in a given area--
a fundamental change in
its ability to create its
own wealth -- is required
before we can speak of economic
development.

The
persistence of regional
economic disparities is
widely recognized as a major
threat to national unity.
According to Donald Savoie,
a national authority in
the field of regional development,
extremely powerful and costly
countervailing forces would
be necessary to change existing
development patterns and
abolish regional disparities.
"The burden that would be
imposed on the ‘have’ regions
would be so large that it
might well be unacceptable
and could threaten national
unity quite as much as would
persistent and pronounced
regional disparities," he
says.

Many
Outer Canadians want regional
disparities in Canada to
be reassessed and a new
set of regional development
objectives to be adopted.
Those applied in the late
1960s are still seen as
sound by too many in Ottawa
and some provincial capitals:
they must be revised. The
goal of reducing regional
disparities as traditionally
defined by income and employment
levels is today unrealistic.

I
do not intend to assess
past policies and programs
that have been tried in
Canada’s regional development
efforts or to assess their
success in alleviating regional
disparities. Nor is a solution
offered that would bring
a dramatic breakthrough
in the field. Inspired by
a persuasive example of
new and better thinking,
the recent monograph prepared
by Dirk de Vos, an Ottawa
official associated with
the Research Centre for
Technology Management at
Carleton University, I’ll
attempt to put regional
development into a new perspective
in the following section.

Regional
Development: A New Look

Canadians,
says De Vos, have ample
resources for sustainable
regional economic development:
space, capital, location,
people, materials, knowledge,
markets and means of communication.
The resources we do not
have we can get abroad.
And yet, in various parts
of Outer Canada, residents
face essentially three options:
"get smart, get poor, or
get out." Residents have
to decide whether their
region will compete on skills
and quality of effort (get
smart) or to reduce their
standard of living to compete
on cost (get poor) or simply
lose population (get out).
This is what one might call
the Atlantic Canada syndrome.

The
heart of the issue is the
ability of a region to manage
what it has got or can get.
National and provincial
governments can do much
by way of removing barriers
and constraints -- whether
fiscal, regulatory or trade-related
-- but the key question
remains: can a province
manage its actual and potential
resources?

No
community anywhere in Canada
or across the earth is without
resources. Singapore’s resources
consist of people and location--
nothing more. Hong Kong
has no land. People without
markets for their products
have gone out to create
them. A remarkable feature
about the Japanese economic
miracle is that, contrary
to conventional thought,
they have often done things
backward. The Japanese tend
to first create or capture
a market for exports, using
borrowed money and borrowed
technology. Once they "own"
the market they invest equity
and profits in further research
and development in a major
way. Canadians across the
country might try to copy
this Japanese approach in
the markets of the Pacific
Rim.

In
contrast, Canada’s regional
development efforts have
followed the traditional
way of thinking. Federal
and provincial governments
alike have sunk billions
of dollars in first building
up infrastructure and subsidizing
research and development.
The idea was that the public
sector first invests in
bricks, mortar, roads, airports, harbours, schools, shopping
centres, industrial parks,
production lines, tourist
facilities, dams, power
lines and all sorts of "growth
poles." Then the governments
subsidize research and development
-- the magic process of
creating new science and
technology. Canadian scientists
loved it, and so did many
participating companies
--mostly large and foreign-owned
-- who walked away with
the write-offs and the credits
considered to be the second-most
generous in the world.

It
was hoped that these two
types of infrastructural
investments --hardware and
research -- would sooner
or later create business
and wealth in the fashion
of a production process.
The Americans, for example,
have statistics showing
how until 1980 on a per
capita basis, incomes across
the United States continually
converged, i.e., tended
to become more equal.

Canadian
governments made similar
claims. Regional disparities,
for one reason or another,
tended until 1980 to become
less pronounced. Around
1980, however, a basic change
took place: the gap between
regional per capita incomes
and the average national
per capita income was widening.
In many cases, this pattern
could be attributed to well-known
forces such as the collapse
in commodity and energy
prices, low labour-cost
competition from developing
countries, the Japanese
onslaught, the glut in the
world automobile markets,
or the formation of regional
trading blocs. Simultaneously
the ability of Ottawa and
other central governments
to control the impact of
external forces had weakened.
Governments manipulated
income taxes, exchange rates,
interest rates, and money
supply to bolster or cushion
their economies. They also
borrowed to the hilt, or
beyond it in the case of
Canada, but such methods
are now running out of steam.
The economists’ computerized
economic models simply no
longer work. As if in desperation,
national governments, including
Canada’s, began to shift
responsibilities and spending
burdens back on to the shoulders
of regional or provincial
governments. These, in turn,
are leaning more heavily
on municipalities which
in many instances must absorb
mounting social assistance
costs.

At
the other end of thespectrum, there is another
pervasive force at work:
the increasing globalization
of economic activity, which,
in many cases, ignores,
or to a certain extent neutralizes,
national boundaries. The
Canada-US Free Trade Agreement
and the Single European
Market of 1992 are only
two of many dramatic examples
of this world-wide trend.
Meanwhile, regions are re-emerging
as economic actors within
a globally competitive world.
Within nations, pronounced
regional disparities are
appearing once again --
for example, between the
southeast and the rest of
Britain; the south and the
north of Italy; the east
and the west in Australia;
between Bavaria and parts
of the Rhineland and the
rest of West Germany; and
also within the United States.
Our country is no exception
to this trend. Some of these
regions are quite small;
some of them straddle national
boundaries. Examples of
integrating such regional
economies abound: along
the north-eastern and north-western
coasts of North America,
around the Great Lakes,
in the basin of the Rhine
River.

What
can be done for, in, and
by a disfavoured region
in Outer Canada to build
greater economic viability?
A region can do nothing
about where it is located
nor can it do anything about
the resources within its
borders. Yet it has the
ability to control what
it does quite aside from
its infrastructure or the
amount of research and development
performed within it.

Most
conventional economists
fall back, time and again,
on the availability of the
so-called factors of production
-- land, skilled labour,
capital and technology.
They speak about comparative
advantage as a kind of automatic
benefit created by the particular
configuration of these factors
of production in a given
region. They assert that
if you have land, skilled
labour and capital, but
lack the technology, then
you must create technology
or go out and buy or rent
it. Hence the new battle-cry:
"R & D and technology
will save us." We live in
an information-intensive
economy; therefore we need
more information. The Fraser
Institute in Vancouver has
gone so far as to assert
that a country or a region
can now be viable and wealthy
merely on the basis of an
information-intensive service
economy. This is a very
dubious proposition.

Other
economists say that a region
should focus on particular
sectors in order to be competitive,
whether agriculture, transportation,
pharmaceuticals, or telecommunications.
They argue that competitiveness
and productivity vary from
sector to sector and that
some sectors are better
than others. If there is
a slump or oversupply in
world markets, we must quickly
get out of the steel industry,
agriculture, shipbuilding,
textiles, footwear, automobiles
or whatever. Indeed, everybody
should be into computers,
biotechnology and new materials.
This is true to a degree,
but the essential point
here is that many development
experts also stress the
importance of a region’s
ability to change and adapt
to external circumstances.

What
is often overlooked is that
in each of these sectors
there are regions and businesses
that are not adversely affected
by the changes. The so-called
sunset industries remain
successful and profitable
while other regions and
companies fail miserably
in the so-called sunrise
sectors. More seems to depend
on who is doing what than
on what is being done.

Approximately
four years ago, the Commission
of the European Community
examined this phenomenon.
It produced a report entitled
Sectoral Productivity
and Regional Policy. Having
looked at productivity trends
across various sectors and
regions in Western Europe,
it concluded that "productivity
disparities are greater
among different regions
in the same sector than
among the various sectors
within the same region."
The sectoral composition
of these regional economies
holds very little explanation
on the levels and the growth
rates of productivity, the
study concluded. Nor did
it make sense to classify
sectors as being advanced
or backward.

Others
who have looked at economic
performance differences
among nations noted that
it did not seem to depend
on what kinds of business
some nations were in. The
Japanese, to their credit,
appear to make a success
of almost anything they
tackle from electronics
to mandarin oranges. Why
have the Danes been so much
more successful than the
Dutch in the industrial
exploitation of the dairy
industry? What distinguishes
the brilliantly successful
Swiss pharmaceutical industry?
Why is Sweden far ahead
of Canada in the technological
and design exploitation
of wood and metals? Why
are the Finns so far advanced
in applied technologies
in the forestry sector?
It has little to do with
the resource endowments
-- cows or pastures, forests
or mines -- little to do
with their location or the
size of their economies.

First,
regional productivity depends
less on endowments and particular
sectors and more on something
else. Second, competitiveness
is not a function of having
or providing land, skilled
labour, capital and even
technology; nor does the
secret lie in "comparative
advantage." Third, external
forces are important but
they are not conclusive.
For example, even after
a 100 per cent appreciation
of their currency the Japanese
have achieved an annual
current account surplus
of U.S. $80 billion and
the profits of more exporting
Japanese companies have
soared. Many have also adapted
well to the environmental
needs of the day by reducing
the amount of resources
used in their manufactured
products.

We
must therefore look again
at factors that are internal
to regions and capable of
being controlled. The brutal
message is that in the long
run, if a region is incompetent
it will remain uncompetitive,
whatever its level of endowments
and whatever sectors it
tries to exploit.

The
more pertinent question,
of course, is: what and
whose competence or incompetence
do we have in mind? Numerous
signs now point in De Vos’s
view, which I share, to
the issue of managerial
competence, the skill of
local politicians and bureaucrats
as much as of the managers
of enterprises, whether
large or small. This competence
has to do with two distinct
spheres of activity: the
management of individual
enterprises, whether public
or private, and the management
of the linkages between
or among enterprises, public
or private.

One
should not equate management
with investment. In the
final resort it is not a
question of physical infrastructure
and plant and equipment
and raw materials or even
of generating or acquiring
technology. Nor, in the
first instance, does the
burden rest on employees
and labour skills. As for
the technologies, even companies
that spend 12 per cent or
more of their sales on research
and development agree that
technology is not the problem.
The technology of the humble
zipper was available thirty
years before its successful
marketing. Some entrepreneurs
even shun the opportunity
of being "first to market"
because of the well-known
problem of the "liability
of leadership." In fact,
few major innovations have
been developed by their
originators.

What
counts is the management
of technology and the management
of enterprises and of the
linkages among businesses
at the regional level almost
regardless of the types
of technology or the industrial
sectors in and around which
the activities take place.
In a broad sense, the issues
are social, not economic
or technical. They have
to do with organization.
More specifically, they
focus on the organization
of linkages both within
an enterprise and among
enterprises. These linkages
are not only vertical between,
say, suppliers and users
and horizontal among similar
players but they also depend
on feedback loops within
systems.

This
is the real secret of Japan
and of the regional productivity
gains identified in Europe.
A successful region or enterprise
is one that is able to add
value to almost anything
by integrating its activities
through the management of
linkages. What we are looking
for is not so much the management
of technology, albeit a
crucial matter, as the technology
of management. In fact these
two interact with each other.
Mastering the technology
of better management by
committed local people is
where regional development
policy should now focus
not only our attention but
also our resources.

Governments
and business in Outer Canada
must concentrate on improving
local managerial capabilities
and functions. A region
is much better placed than
any other geographical or
political entity to master
and practise the art of
exploiting linkages. First,
a region is geographically
confined; sooner or later
spatial factors assert themselves
despite all the talk about
the global village and electronic
networks. This is why many
sensible economists are
economic geographers; they
have their feet on the ground.
For this same reason, engineers
are such useful people --
they deal with the real
world. Perhaps the best
thing the American General
Douglas MacArthur did after
the war was to put Japan’s
industrial resurgence in
the hands of engineers,
after he had fired most
of the economists, especially
the ones who preached comparative
advantage.

A
region also has a degree
of social or cultural homogeneity,
which helps to enhance the
quality of communication,
the essence of linkages.
Residents of Cape Breton
share the same history;
so do those of northern
Saskatchewan. Also, regional
loyalties can be quite strong
and command a high degree
of commitment and self-interest.
A region can redefine itself,
an important aspect of the
ability to adapt to change,
to survive and to prosper.
The new linkages that are
forged will also help to
redefine the region. Thus
a region can become more
flexible and more innovative
as it develops new internal
and external alliances.
In fact, it may become part
of a different region for
different purposes. Linkage
is a creative process, but
it has to be managed.

A
country or region or enterprise
can no longer wait for these
things to occur haphazardly.
Technological and market
windows of opportunity appear
and pass quickly, so one
must be organized in advance
to be able to seize them
when they open up. Japan
can apparently jump on to
any passing train. Hong
Kong and Singapore prosper
in the same way. They are
able to gear up an existing
organizational infrastructure
on very short notice.

The
need to be able to manage
technology rather than simply
relying on capital subsidies
or research and development
incentives has finally caught
the attention of people
in other countries and regions.
The first major American
conferences on the management
of technology took place
in early 1988; the first
important European conference
on the subject was held
in Belgium in mid-1989.
In June, 1989 the Department
of Industry, Science and
Technology organized in
Ottawa its first in-house
pilot introductory course
on the management of technology
for the benefit of departmental
officers who deal directly
with business people usually
in Outer Canada.

Technology
management is a multi-faceted
art, not easily taught or
learned. Just as in the
field of computing and communications
the emerging emphasis is
on the software, on programming,
rather than on the hardware;
and just as in the management
of technology the focus
shifts from the technology
to its management, so, on
the managerial side, more
attention must be paid to
the organizational aspects
of management. Innovation
as well as production and
marketing depend more and
more on designing and exploiting
linkages.

Consider
the ongoing problem of technology
transfer within companies,
among companies, among universities
and businesses, and within
and among regions and countries.
It boils down to the nature,
quality and extent of vertical
and horizontal linkages
and their management. Outer
Canadians in particular
can no longer take a hands-off
attitude to these processes.
Linkages themselves are
an engine of growth, which
can be harnessed for profit,
if not economic survival.
Thus, in both our public
and private sectors, and
between them, managers must
develop a better capacity
to understand, use and exploit
various forms of co-operation,
whether we call them strategic
alliances , partnerships
or joint ventures.

These
have been practised very
successfully over the years
in particular fields such
as oil and gas exploration
in Western Canada and elsewhere.
Prairie farmers do not have
to be convinced about the
value of cooperatives and
agricultural extension services.
Such reservoirs of experience
could form a good foundation
for the more sophisticated
modern approaches to the
art and science of inter-community
linkages, particularly when
they involve technology.
Indeed, an impressive consulting
service for businesses in
Australia was directly modelled
on agricultural extension
services despite the added
difficulty that business
people, unlike farmers,
are often in direct competition
with one another.

Speaker
after speaker at conferences
on the management of technology
arrive at similar conclusions,
namely, that the crucial
difference lies in organizational
structures and processes
and their design and management.

Considering
the complaints of many Outer
Canadians, the fact that
regional supply factors
are more important than
national demand factors
is as staggering as the
fact that sectoral factors
are relatively unimportant.
What matters most is the
deep interdependence among
the actors and sectors in
the same regional economy.
And surely, this is a management
problem. What we do not
need are more institutions,
more "centres" of this,
that or the other kind,
more bureaucracies, more
studies and reports, or
probably even more borrowed
public money to be dumped
into the black hole of conventional
regional development notions.
Western Diversification,
for example, prides itself
on its funding to date of
more than a thousand enterprises.
All Westerners hope the
long-term success rate will
be high. I worry when I
hear accounts such as the
one only a few months ago
from a local manufacturer
in Edmonton who came to
my office to complain that
a competitor generously
subsidized by Western Diversification
was threatening to put him
out of business.

Equally
important is the realization
that regions, and quite
often small ones, now interact
directly with the global
economy and no longer necessarily
through or by the grace
of the central or federal
authorities. For example,
the state of Texas has an
observer in meetings of
the Organization of Petroleum
Exporting Countries (OPEC).
Regional interests often
straddle national boundaries
as demonstrated by the recent
meeting of two Western premiers
with the governors of several
Western states.

Ottawa
must rethink its regional
development programs in
fundamental ways. Likewise,
Outer Canadian leaders must
redefine their strengths
and concentrate on the areas
where those strengths are
greatest. As usual these
kinds of change can be either
a threat or an opportunity.
At the very least, they
put regional development
into a new perspective.

The
new challenge will bring
out the best or the worst
in Canadians everywhere.
We have a splendid developmental
opportunity. We could start
by mastering such difficult
things as the ability to
exploit linkages where the
actors compete and co-operate
at the same time. Simultaneous
competition and collaboration
within partnerships and
among businesses is one
of the apparent contradictions
that can now be put to work
for the benefit of both
Outer and Inner Canadians
generally.